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Finance & Accounting
Pages 5 (1255 words)
Running Head: Accounting Accounting Name Institution Date Q1. A Accounting is a process which involves identifying, measuring, recording and communicating economic information to users of the information to be able to make judgments and decisions (Warren et al, 2008).
The double entry system identifies and records all the accounting transactions. Measurement of accounting information involves making subjective judgment about the value of assets or liabilities relating to a business. It also involves measurement of profits or losses made in an accounting period. Accountants also record accounting data which is presented as economic information to users. It is referred to as economic information since it relates to the economic or financial activities of a business. The main financial statements that accountants prepare are the income statement, balance sheet and the cash flow statements (Warren et al, 2008). The balance sheet indicates the resources owned and owed by a business at a particular point in time. It also shows the investments made by the business and the sources of these investments. The income statement shows the profitability of a business while cash flow statement reflects the cash movement in and out of business. The preparation of all financial statements require the accounting professionals to apply all the set accounting processes to the latter in order to ensure relevance, reliability and understandability of the financial statements by the users. This is an indication that too much value of the accounting process is exercised by professionals in the identification, measuring, recording and communication of economic events. Q1. ...
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